The air crackled with anticipation as Knut Flakk, Chairman of Hexagon Composites, stepped in for the absent CEO during the Q1 2024 earnings call . While the market fixated on the seasonally slow fuel systems business and the impending CEO transition, a subtler, yet potentially explosive, story was unfolding – the looming arrival of the Cummins 15-liter natural gas engine. Flakk, the company founder with a 25-year track record of steering Hexagon through periods of exponential growth, knows a thing or two about identifying game-changing innovations. And this time, his excitement about the 15-liter engine was palpable, even contagious.

Why the buzz about an engine? Hexagon doesn't manufacture engines. They specialize in creating the high-tech, lightweight composite fuel systems that feed these engines, particularly for heavy-duty trucks. Up until now, their reach in the lucrative North American trucking market has been limited. The existing 9-liter and 12-liter natural gas engines could only realistically serve one-third of the heavy-duty truck segment, leaving a vast swathe of the market untapped.

Enter the 15-liter engine. Not only does it unlock the entire heavy-duty truck segment, allowing natural gas to compete head-to-head with diesel across all weight classes, but it does so with a punch. Flakk highlighted its superior power and torque, critical for hauling heavy loads , but the real clincher is its remarkable fuel efficiency. The 15-liter engine boasts a 10% efficiency advantage over its 12-liter counterpart, a compelling argument for fleet owners seeking to maximize their operational efficiency.

But here's where the story takes a truly intriguing turn. While Flakk exuded confidence about the imminent arrival of the 15-liter engine, the transcript reveals a curious detail – a distinct lack of firm orders. This isn't typical. Usually, the announcement of a groundbreaking engine, particularly one that has already proven itself in other markets like China, would be accompanied by a flurry of pre-orders from eager OEMs and fleet owners.

The absence of these orders, coupled with the mention of a “vacuum” in recent quarters , paints a fascinating picture. It suggests a calculated waiting game. It appears Hexagon's customers, fully aware of the game-changing potential of the 15-liter engine, are holding back, creating a pent-up demand that's poised to explode once serial production commences in Q3.

This strategic pause presents a unique investment opportunity. The market, fixated on short-term headwinds, seems oblivious to the seismic shift that's about to rock the natural gas trucking sector. Hexagon, meanwhile, has been diligently preparing. They've invested heavily in expanding their cylinder production capacity, doubling it to handle a projected revenue surge of $800 million by January 2025 .

Projected Growth in Natural Gas Truck Adoption

Industry analysts predict a five-fold increase in natural gas vehicle market share by 2030, driven by renewable natural gas availability and decarbonization mandates. The 15-liter engine could further accelerate this adoption.

Let's crunch some numbers. The North American heavy-duty trucking market currently sees a meager 2-3% penetration by natural gas vehicles. Conservative projections by industry analysts predict a five-fold increase to 10% by 2030, fueled by the growing availability of renewable natural gas and increasingly stringent decarbonization mandates. If the 15-liter engine lives up to its hype, triggering a rapid adoption of natural gas trucks, that 10% market share could easily surge to 15% or even higher, mirroring the dramatic shift witnessed in China.

Now, consider Hexagon's 70% market share in fuel systems for natural gas heavy-duty trucks in the US . A five-fold market expansion, even without factoring in the 15-liter engine's potential to accelerate adoption, translates into a staggering five-fold revenue increase for Hexagon. Add to this the global expansion of their mobile pipeline business, catering to the burgeoning demand for renewable natural gas and hydrogen distribution, and the picture becomes even more compelling.

Hexagon Composites, a company deeply rooted in technological innovation and driven by a vision of "clean air everywhere," seems poised for an explosive growth trajectory. They've identified a game-changer in the 15-liter engine, strategically positioned themselves to capitalize on its arrival, and are patiently waiting for the market to catch up. For investors seeking exposure to the rapidly expanding clean energy sector, Hexagon Composites presents a compelling, yet somewhat under-the-radar, opportunity. The 15-liter engine, while seemingly overlooked by the market, might just be the secret weapon that propels Hexagon to achieve five-fold growth in the coming years.

"Fun Fact: Hexagon's composite cylinders, while designed for storing highly pressurized gas, are remarkably lightweight. A typical cylinder used in a heavy-duty truck can weigh up to 80% less than its steel counterpart, significantly improving the truck's payload capacity and fuel efficiency."